PLG Metrics: 12 Key Indicators for Product-Led Growth Success

PLG metrics are the key performance indicators that measure whether your product-led growth strategy is working. Unlike traditional marketing metrics, PLG metrics focus on how users experience and adopt your product, not how many ads you run.

According to ProductLed's benchmark survey of 600+ SaaS companies, 91% of B2B SaaS companies with PLG motions plan to increase their investment. Yet only 34% track activations, and just 24% use Product Qualified Leads (PQLs) despite evidence that PQLs convert at 3x higher rates.

The gap between PLG adoption and PLG measurement represents a massive opportunity. This guide covers the 12 metrics that matter most, organized by the stage of your growth funnel.

"Just because you can track something doesn't mean you should." — Adam Greco, Product Evangelist at Amplitude

That quote captures the essential challenge. More data is not better data. The companies that win at PLG track fewer metrics with higher precision, not more metrics with lower quality.

The PLG Metrics Framework

PLG metrics map to the AARRR framework (also called pirate metrics): Acquisition, Activation, Retention, Revenue, and Referral. Each stage has specific metrics that signal health or problems.

Not all metrics matter equally at all times. Early-stage companies should obsess over activation. Growth-stage companies should focus on retention and expansion. Mature PLG companies optimize the entire funnel simultaneously.

Activation Metrics: Where PLG Lives or Dies

Activation is the moment users first experience meaningful value. It is the single most important category of PLG metrics because everything else depends on it. Users who never activate will never retain, convert, or refer.

1. Activation Rate

What it measures: The percentage of new signups who complete key actions that correlate with long-term retention.

Formula: (Users who completed activation actions / Total signups) × 100

Benchmark: The median SaaS activation rate is 17%, while top performers reach 65%.

Defining activation requires understanding what behaviors predict retention. Facebook discovered that users who added 7 friends within 10 days were dramatically more likely to become long-term users. Your product has similar thresholds; finding them is essential work.

"Vanity metrics make us feel good, but they don't move the needle." — Ben Yoskovitz, co-author of Lean Analytics

Activation rate is not a vanity metric. It directly predicts revenue. Companies that improve activation rate see proportional improvements in conversion and retention.

2. Time-to-Value (TTV)

What it measures: How quickly new users reach their first activation moment.

Formula: Average time from signup to completing activation action

Target: As short as possible. Every hour of delay reduces conversion probability.

TTV matters because attention is scarce. Users who do not experience value within their first session often never return. Product teams should audit every step between signup and activation, removing unnecessary friction wherever possible.

Strategies to reduce TTV include progressive disclosure (showing complexity gradually), contextual onboarding (guiding users where they need help), and quick wins (delivering value in the first session).

3. Product Qualified Leads (PQLs)

What it measures: Users who have completed activation actions and show buying intent through product behavior.

Formula: Count of users meeting PQL criteria (varies by product)

Benchmark: According to ProductLed, free trials using PQLs convert at 25% on average. For products with $5,000 to $10,000 annual contract value, that number reaches 39%.

PQLs are fundamentally different from Marketing Qualified Leads (MQLs). MQLs indicate interest; PQLs demonstrate actual product usage. This distinction matters because behavior predicts conversion far better than demographics or intent signals.

Despite their proven effectiveness, only 24% of product-led companies use PQLs. This represents an enormous competitive advantage for teams willing to implement proper PQL tracking.

Retention Metrics: The Foundation of Sustainable Growth

Retention determines whether your PLG flywheel compounds or collapses. High acquisition with low retention is a leaky bucket that no marketing spend can fill.

4. Retention Rate

What it measures: The percentage of users who remain active over a defined period.

Formula: ((Users at end of period - New users during period) / Users at start of period) × 100

Benchmarks vary by product category:

• Productivity tools: 40-60% monthly retention is healthy
• Social products: 20-30% monthly retention is typical
• Enterprise SaaS: 85-95% annual retention expected

Retention curves reveal product health. Flattening curves indicate you have found product-market fit for some segment. Continuously declining curves signal fundamental problems that growth cannot solve.

5. Product Stickiness (DAU/MAU Ratio)

What it measures: How frequently active users return to your product.

Formula: Daily Active Users / Monthly Active Users

Interpretation:

• 50%+ stickiness: Users engage almost daily (e.g., Slack, email)
• 20-50% stickiness: Regular weekly usage (e.g., project management)
• Below 20% stickiness: Infrequent usage (may be acceptable for some products)

Stickiness matters because it reveals habit formation. Products that become habits are much harder to churn from. Your product strategy should consider how to increase usage frequency without annoying users.

"You need success metrics based on facts. Otherwise you can't argue or justify anything." — Matthias Kluge, Churn Optimization Expert

6. Feature Adoption Rate

What it measures: The percentage of users who use specific features.

Formula: (Users who used feature / Total active users) × 100

Feature adoption reveals whether your product delivers value across its full capability set. Low adoption of key features suggests onboarding gaps or feature discoverability problems. Very low adoption might indicate features to remove.

Track feature adoption cohorted by user segment. Power users adopt different features than casual users. Understanding these patterns informs roadmap prioritization.

Revenue Metrics: Measuring Business Impact

Revenue metrics connect product behavior to business outcomes. PLG companies track these to understand the economic efficiency of their growth model.

7. Free-to-Paid Conversion Rate

What it measures: The percentage of free users who become paying customers.

Formula: (Free users who converted to paid / Total free users) × 100

Benchmarks from ProductLed (600+ companies):

Conversion rate is the clearest signal of PLG effectiveness. If users experience value but do not convert, pricing or packaging may need adjustment. If users convert but churn quickly, value delivery is the problem.

8. Expansion Revenue

What it measures: Additional revenue from existing customers through upsells, cross-sells, and add-ons.

Formula: Revenue from upgrades + Revenue from add-ons + Revenue from cross-sells

Benchmark: According to Appcues, at least 30% of total revenue should come from expansion for healthy SaaS businesses. Expansion is 2-3x cheaper than new customer acquisition.

Expansion revenue is the anti-churn metric. When expansion exceeds churn, you achieve negative net revenue churn. This means your existing customer base grows in value even without new acquisitions.

9. Net Revenue Retention (NRR)

What it measures: The percentage of recurring revenue retained from existing customers, including expansion and churn.

Formula: ((Starting MRR + Expansion - Contraction - Churn) / Starting MRR) × 100

Benchmarks:

• Below 100%: Revenue shrinking from existing customers (problem)
• 100-110%: Healthy retention with modest expansion
• Above 120%: Strong PLG with significant expansion (excellent)

NRR above 100% means your customer base grows without adding new customers. This is the hallmark of exceptional PLG companies. Track NRR monthly and investigate any downward trends immediately.

10. Average Revenue Per User (ARPU)

What it measures: Average revenue generated per active user.

Formula: Total Revenue / Number of Active Users

ARPU helps evaluate pricing strategy effectiveness. Increasing ARPU through better packaging or expansion motions can be more efficient than acquiring new users. Monitor ARPU trends alongside customer count to understand growth composition.

Referral Metrics: Measuring Virality

Referral metrics indicate whether users value your product enough to recommend it. Strong referral creates compounding growth that reduces customer acquisition costs.

11. Viral Coefficient

What it measures: How many new users each existing user brings in.

Formula: Average invites sent per user × Conversion rate of invites

Interpretation:

• Below 1.0: Each user brings less than one new user (most products)
• 1.0+: True viral growth where users multiply (rare)

Viral coefficient above 1.0 creates exponential growth. Very few products achieve this sustainably. Even a viral coefficient of 0.5 (each user brings half a new user) significantly reduces CAC over time.

"There is one metric that really helps drive your entire business." — Ben Yoskovitz, co-author of Lean Analytics

For PLG companies, that one metric is often activation rate or NRR, depending on company stage. The viral coefficient supports these core metrics but rarely stands alone.

12. Net Promoter Score (NPS)

What it measures: User willingness to recommend your product.

Formula: % Promoters (9-10) - % Detractors (0-6)

Benchmarks:

• 0-30: Good
• 30-70: Great
• 70+: Exceptional

NPS provides a leading indicator of referral behavior. Users who score 9-10 are more likely to actively recommend your product. Track NPS cohorted by user segment to identify which users are most satisfied and why.

Metrics to Avoid (or Use Carefully)

Not all metrics that can be tracked should be tracked. Some metrics distract from what matters.

Signups without activation context: Raw signup numbers look impressive but mean nothing without understanding activation rates. A thousand signups that never activate generate zero value.

Feature usage without outcome correlation: Tracking every click creates noise. Only track features where usage correlates with retention or conversion.

Vanity metrics: Page views, total registered users, and social media followers rarely predict business outcomes. Focus on metrics that connect to revenue.

"Just because you can track something doesn't mean you should." — Adam Greco, Product Evangelist at Amplitude

Start with business questions, not data points. What decisions do you need to make? Track only what informs those decisions. Everything else creates confusion and maintenance burden.

Implementing PLG Metrics

Effective PLG measurement requires infrastructure and discipline.

Start with Three to Five Metrics

Do not try to track everything immediately. Choose the metrics most relevant to your current challenges:

• Early-stage: Activation rate, TTV, PQLs
• Growth-stage: Conversion rate, NRR, Feature adoption
• Mature: Full funnel optimization across all metrics

As Adam Greco advises, having 10 events you trust is better than 200 events you do not. Build measurement capability incrementally, ensuring data quality at each step.

Assign Clear Ownership

According to ProductLed's research, Product leads PLG strategy 49% of the time, while Marketing is involved 42% of the time. Sales handles free-to-paid conversion for only 23% of companies.

Clear ownership prevents metrics from falling through cracks. Each metric should have someone accountable for tracking, analyzing, and improving it.

Choose the Right Tools

PLG metrics require proper instrumentation. Common tool categories include:

• Product analytics: Mixpanel, Amplitude, PostHog for event tracking and funnel analysis
• Revenue analytics: ChartMogul, Baremetrics, ProfitWell for MRR, churn, and expansion tracking
• Session replay: FullStory, Hotjar for understanding user behavior qualitatively
• Data warehousing: Segment, Snowflake for unified data collection

Tool selection matters less than consistent implementation. A simple setup that everyone trusts beats a sophisticated stack that nobody maintains.

Create Feedback Loops

Metrics only matter if they inform action. Build regular review cycles where teams examine metric trends and plan improvements. Connect metrics to your OKRs to ensure alignment between measurement and goals.

PLG Metrics by Company Stage

Different stages require different metric priorities.

Attempting to optimize metrics for a later stage before mastering earlier stages leads to wasted effort. A company with poor activation should not obsess over viral coefficient.

Getting Started

If you are new to PLG metrics, start here:

1. Define activation: What actions predict long-term retention?
2. Measure conversion: What percentage of free users become paid?
3. Track retention: Are users coming back?

These three questions cover the core of PLG measurement. Everything else builds on this foundation.

For a deeper understanding of product-led growth strategy, see the comprehensive guide on product-led growth. For connecting PLG metrics to broader business goals, explore product KPIs and the OKR framework.

Questions about implementing PLG metrics? Connect with me on LinkedIn.